ABSTRACT

The banking sector is one of the leading sectors in Turkey as well as in the rest of the world, and its existence is important in terms of economy. The banks in the system, on the one hand, carry out their intermediary activities, on the other hand, they operate as a credit creation authority. While performing these activities, banks try to create various sources of income. The most important source of income is the interest item. However, as a result of the changes and transformations experienced in recent years, non-interest income items have also become a powerful source of income. This is important for the profitability of banks as well as the functioning of the credit transfer mechanism. In this study, it has been investigated to what extent interest incomes and non-interest incomes affect the total loans extended by banks. Thus, it has been tried to determine which income item is more effective on bank loans and in which direction it interacts with the help of the VAR model within the scope of Granger causality analysis. As a result, while a mutual and positive causality relationship was determined between interest incomes and loans, it was found that noninterest income was also effective together with interest income.